By Lewis Diuguid
It always seems to happen like this for everyday Americans — just when it seems like the dark clouds from the last recession are lifting for Joe and Josephine Sixpack, along comes a new downpour of hard times.
And the rain in this climate change economy of more severe, global-marketplace-driven financial storms never lets up. The jobless rate for May released last week looked like a winner with unemployment falling from 5 percent the last few months to 4.7 percent, the lowest since November 2007.
But the Labor Department also said that employers only added 38,000 jobs. Hopes are always for 200,000 jobs or more.
The department also reported that 538,000 people simply stopped looking for work, which means they no longer are counted among the unemployed. That makes the jobless numbers look far better than they actually are.
Joe and Josephine Sixpack and most other Americans will remember that at the end of the Great Recession in June 2009, the unemployment rate was 9.5 percent.
Add to that frowny face economic outlook a Labor Department report on Wednesday that showed that U.S. job openings were up 2 percent to 5.8 million in April, but hiring was down to just 5.1 million. So the small window of happy days of hiring is starting to close — again.
Everyday Americans have felt this pain before. Their hours at work were reduced during and after the Great Recession. They experienced a steep falloff in the equity in their homes. Interest earnings on savings plunged. The value of stocks they might have held and retirement accounts plummeted and a lot of people lost their homes to foreclosures.
The softness in the economy seems to be threatening Joe and Josephine Sixpack again.
The labor market slide has prompted the Federal Reserve to tap the brakes on raising interest rates this month, fearing that doing so might hurt the sputtering economy. Fed Chairwoman Janet Yellen in a speech Monday raised doubts on a rate hike taking place this summer.
The Federal Reserve in December raised its benchmark interest rate by 0.25 percentage points, to a range of 0.25 to 0.5 percent. It was the first increase in seven years. The Fed had kept its short-term rates near zero to help the flagging U.S. economy.
Meanwhile, the economic troubles gripping China, the European Union and many oil-producing countries is being felt in the U.S. as exports also falter.
The UBS Group gives a grim report this week on the outlook of a recession hitting next year in the United States. Bloomberg News reports that the Swiss global financial services company’s credit-based recession probability index shows there is a 34 percent chance of a recession occurring in the first quarter of 2017.
That could increase to 50 percent if the Federal Reserve increases interest rates too fast. Oil prices are starting to regain ground.
That’s good for oil producing states in the U.S. and countries that live on oil exports. However, the price of gasoline also has gone up.
Joe and Josephine Sixpack will feel that directly because they will have less money to spend on enjoyable, working folk things — like beer.
Lewis Diuguid is a columnist for the Kansas City Star. Readers may email him at [email protected]. Column courtesy of the Associated Press.